It and retailing
It and retailingIT AND RETAILING
What is e-commerce?
E-commerce is the buying and selling of products and services by both businesses and consumers over the Internet. Such practices have exploded over the last year as security has improved with more and more consumers now buying goods and services online. This coupled with the computer revolution of the late twentieth century has lead to e-commerce now becoming the buzzword of trade and industry as hundreds of companies are now moving online in an attempt to broaden their product range and direct contact with customers.
Why has it grown so rapidly?
Firstly we must understand why companies are being drawn towards selling their products online. An e-commerce site that is implemented well can significantly lower both order taking costs up front and also customer service after the sale has been made. For example being located on the Internet means that place does not enter into the marketing mix of an e-commerce company. As its customers will not visit the business, it means having a prominent high street location is no longer of importance; in fact a business can be set up in someone�s home (if space for storage allows!). Also when considering mail order companies there is no longer the need to endure the costs of designing, printing and sending out catalogues. These factors contribute to e-commerce companies being able to offer products at greatly reduced prices as overheads have been minimised.
A company now has the ability to provide customers with a catalogue that has a far more extensive range than that of which any mail-order catalogue could provide. Recently Amazon have advertised that they currently offer more than 3 million books, to further their service they also give the customer the opportunity to read a description of every book supplied and also other titles buyers of the book have purchased. It is inconceivable to imagine all this information being provided in any catalogue that comes through the letterbox.
So we now can see some of the benefits that firms encounter from locating on the web but what do the consumers get out of this? It is now far easier to collect market research and make reasonable comparisons as by using the Internet you have the ability to amass, analyse and control large quantities of specialised data. The Internet can give the opportunity for customers to try before they buy. For example the online record store Klik-Klik-Whirly-Bleep-Bleep gives the online shopper the opportunity to listen to any record before they buy it, an essential factor to regular purchasers of records and especially dj�s.
There is also the potential of wider availability of hard-to-find products and wider selection of items due to the width and efficiency of the Internet. One such example being �Squaddies Online�, this company has developed its success by selling goods that are normal in everyday life in the United Kingdom but are sorely missed by those that are overseas for any great length of time. For instance amongst the current best selling items are Heinz Tomato Ketchup and HP Brown Sauce!
The increase in the ability to undertake market research has inevitably led to the reductions in prices as more suppliers are able to compete in an electronically open market place. This increase in competition has lead to better quality and variety of goods through expanded markets and the ability to produce customised goods. When the motorbike company Dukati recently launched their online site they sold their stock within 31 minutes of opening with a popular feature being giving the customer the opportunity of designing the exact colour scheme of the bike.
E-commerce equals success?
So far the benefits of e-commerce are outlined and you would be forgiven for immediately wanting to dream up your own way of becoming rich through the internet. But it is by no means plain sailing. Seven out of ten internet businesses located within the United Kingdom fail to trial their service before it is launched. Even then almost all are likely to have experienced problems and over a fifth are now experiencing significant customer service disruption as a result of sudden surges in demand or server overload.
Hundreds of web sites and not just e-commerce services have been launched in the United Kingdom during 1999. The Pricewaterhouse Cooper group informs us on there website that this figure is set to explode to �60 billion within the next three years. However market shares are going to be effected in ways previously unseen before through the failures of sites and service providers. Failure in e-commerce is not always going to be caused by poor products but rather by not building sites that are as efficient and usable as its competitors.
For an e-commerce business to be successful it is essential that the sites are given thorough pilot tests so that faults can be found and also customer behaviour patterns can be learnt. It is possible that such a venture can take off as an amazing success however there is also the danger of overselling. This can cause potentially lethal consequences as if the server used is not big enough to cope with the demand then the site is likely to crash or be severly disrupted through overload. Indeed any e-commerce system should have some sort of early warning device to notify the programmers that there are problems as soon as possible.
Digital Television
So far the e-commerce has only been covered in terms of the internet through use of the home computer. Digital television uses television to access a range of interactive services including e-mail and the internet.
Once companies build websites to generate businesses they start to recognise the role the Internet could play in the communications process. However there are still worries that the Internet is still not receieving enough coverage in terms of those with access. However didgital television has the potential to cause a far greater impact.
Digital television provides access to a larger target audience as its popularity is currently growing at an exponential rate. The large range of channels also means that communications can be tailored to suit the person viewing more effectively especially with the wide range of visual and audio devices at the sellers disposal. Security is not seen as the same potential mishap as on the internet as there aren�t fears hackers being able to break into sites and accessing personal information.
By accessing the Open interactive service on digital television you are able to visit stores such as Next, Woolworths, WH Smiths and Dominos Pizza. All of which are firms that are highly reputable which will also give the customer confidence when using. However it is not such an easy options for companies as there is currently a high cost of entry when wishing to move into such ventures. Indeed currently companies are having to rely on the consumer having access to this technology
Conclusions
E-commerce is growing at an explosive rate on the Internet. Before the end of this decade, millions of people will be buying, selling, bidding and advertising on a daily basis as the internet merges with other branches of the information highway. The new economies of scale that are evident for such companies drastically lower the cost of establishing and maintaining a successful company.
It is vital that any business wanting to start up in e-commerce should continually examine the risks and opportunities created by such a venture. It is essential that designers make use of the technologies that are available. In the long-term the risks of lagging now are likely to exceed those of continuing with less then maximum adoption strategies.
Currently the Internet does have its limitations that may not make it suitable for all ventures. However with the rate that technology is expanding the Internet will soon become �industrial strength� whereby it will be possible to comply with all requirements and safety regulations. This will also include what services can be accessed and by who.
The emergence of Digital Television has also increased the significance of e-commerce as now even more people are able to purchase goods within a matter of seconds even if it is in a slightly different way. By encouraging e-commerce all sides will gain through lower prices and better quality. It is only a matter of time before e-commerce becomes an obvious part of our lives.
Bibliography
Selling and Sales Management- Jobber and Lancaster � 1997
Marketing- Dibb Simkin Pride and Ferrell � 1998
Harvard Business Review � July- August 1999
PricewaterhouseCooper � www.pwcglobal.com
Sunday Times- The Internet Edition � www.Sunday-Times.co.uk
The Electronic Telegraph � www.telegraph.co.uk